Why the robot takeover of the economy is proceeding slowly

Friday

Jul 7, 2017 at 3:23 PMJul 7, 2017 at 3:23 PM

By Craig TorresBloomberg

Vik Singh's company has powerful artificial intelligence software that helps firms hunt down the best sales leads. Getting somebody to use it — well, that's a story that says a lot about the U.S. expansion.

U.S. businesses have every incentive to adopt labor-saving technologies, replacing factory workers with robots and desk jobs with smart software. In some areas, such as finance, machine decision-making is advancing quickly. In others, there are obstacles. Overall, while the penetration of automation in the economy is happening, it is taking place at a slower pace than futurists expected.

Singh tells customers how his system can help trim sales prospecting staff and boost revenue. Managers are intrigued but sometimes reluctant to entrust a high-touch business such as sales to a black box.

Hundreds of companies are trying to disrupt the way we consume, work, or move. The economy's growth potential could be higher if smart machines could turbocharge how humans go about their tasks. Higher productivity, or output per hour, would boost corporate profits and may help U.S. workers finally get a pay raise.

That economic nirvana just isn't happening yet.

Productivity in the U.S. rose only 1.1 percent last year and rather than being replaced by technology, more workers are being hired. Employers have added an average 159,000 new jobs a month so far in this expansion compared with 99,000 in the previous upswing. Over the same period, investment in intellectual property products, such as software, has barely edged up as a share of GDP versus the last cycle.

"Low labor productivity is the biggest problem with the story that I tell," said Andrew McAfee, co-director at the Massachusetts Institute of Technology's Initiative on the Digital Economy and co-author of "The Second Machine Age," a book about the next wave of technology. "Some of these pretty profound innovations are going to take time to diffuse."

There isn't a single story that explains why second-wave technologies are trickling rather than flooding into the economy. Bloomberg News spoke with several to find out how the pace of technological adoption is proceeding. Here are some of the themes that emerged:

• Robots can handle highly repetitive tasks in manufacturing, but at BMW's largest plant in the world, located in Spartanburg, South Carolina, the talk is about complexity and customization — tasks that need human input.

• Finally, when it comes to turning any critical operation over to a computer, there is this one big sticking point: trust.

BMW's Spartanburg plant — the largest BMW factory in the world by volume that sprawls over 6 million square feet — is the highly-automated car maker that technologists talk about.

The hype around robotics suggests a world where humans have little input in manufacturing. Talk to BMW managers, however, and it's all about getting the right mix of humans and machines in a world where customization and complexity are big challenges.

Almost every one of the 1,400 X-series SUVs rolling off the line here each day has been custom ordered by somebody. While about 1,600 robots weld, drill and paint auto bodies in steel cages, further down the line the cars are surrounded by humans adding this audio system or that trim. Humans are paying close attention to look, feel, smell, and even the sound of these cars to ensure BMW authenticity.

"You can build a car for months and months, and never build the same car twice," says Steve Wilson, a spokesman for BMW Spartanburg.

If there is one lesson from the team here, it's that robots move processes while humans improve them, according to Richard Morris, vice president of product integration, who has been with BMW in Spartanburg since 1993. Morris says technology is good for "transactional jobs." He adds: "There is something that we call transformation and that is something only a human can do."

"When you put automation out there you are just living in the status quo, but with people you are constantly improving the process and finding ways to make it better," Morris added. "Sometimes it is better to start with people."

Managers are constantly on the lookout for new ways to insert more automation. One recent addition: a small "co-bot," working next to humans that rolls protective foil on a door frame. Having a machine do this simple task several hundred times a day saves time and wear on human hands.

But the company's continuous improvement wall, a display where they show dozens of small refinements created by their team, doesn't feature a single robot.

"I have never been inspired to do more by a robot, I have never gotten any ideas on how to improve something on the shop floor from a robot," Morris said. "Little improvements every day add up to efficiency, and we are adding more cars and we are still hiring."

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